RealtyMogul.com is an online marketplace for real estate investing. We are often referred to as a crowdfunding platform, marketplace lender, or peer-to-peer lender. Whatever term you choose to use, we are here to connect investors who want to invest in real estate with real estate companies that need real estate capital – either debt or equity - it’s that simple.
Through the RealtyMogul.com platform, accredited, non-accredited, and institutional investors have the opportunity to invest in real estate opportunities online through a private, secure website. Investors can browse investments, review due diligence materials and sign legal documents securely online. Once invested, investors have access to an investor dashboard, giving them 24/7 access to watch how their money is working for them.
We are here to simplify real estate investing through the use of technology.
If you want to invest money, you can start here.
If you are looking for debt or equity for your real estate project, you can start by completing an application here.
RealtyMogul.com is a team of professionals, with experience in real estate, technology and finance. You can learn more about us here.
RealtyMogul.com is committed to protecting the privacy and confidentiality of information. This includes but is not limited to physical and electronic procedures to protect information from loss, misuse, damage or modification by unauthorized access. Some of the central features of our security program are:
- Internal and external review of our public and non-public Internet sites and services;
- The use of specialized technologies such as firewalls and encryption;
- Rigorous multi-stage testing of the operability of products and features before they are exposed to the Internet as well as updates for known vulnerabilities;
- Monitoring of our systems infrastructure to detect weaknesses and potential intrusions.
The company was founded by Jilliene Helman and Justin Hughes, and the RealtyMogul.com platform was formally launched in 2013.
Jilliene is the CEO of the company, responsible for the company’s strategic direction and operations. Jilliene, who sits on RealtyMogul.com’s board, has underwritten over $5 billion of real estate and was previously a Vice President at Union Bank, where she spent time in Wealth Management, Finance and Risk Management. Jilliene is a Certified Wealth Strategist®, holds Series 7, Series 63, and Series 24 licenses and has a degree in Business from Georgetown University.
Justin is the Co-Founder of RealtyMogul.com and a licensed real estate professional in California. Justin, who also sits on the company’s board, previously ran an independent consultancy in Los Angeles managing on-line communities and building web presences. Justin holds Series 7, Series 63, and Series 24 licenses, and earned a Bachelor's Degree in Cognitive Science from the University of California at Berkeley.
We have a team of professionals with experience in real estate, credit, technology, finance, and regulation. You can read more about our leadership here.
We are headquartered in Los Angeles, CA, and have regional offices in Salt Lake City, UT, Atlanta, GA, and New York, NY. If you need our contact information, you can find it here.
RealtyMogul.com is backed by various venture capital firms and additional strategic investors such as real estate firms. In March 2014, we completed our first major capital raise for $9 million, which was led by Canaan Partners, a prominent venture capital firm and one of the first investors in LendingClub. Most recently, in July 2015, we raised an additional $35 million from Sorenson Capital, Canaan Partners, and additional strategic partners.
To date, investors have invested over $338 Million through RealtyMogul.com, financing 350+ properties valued at over $2 Billion.
General Investor Questions
RealtyMogul.com investors include high net worth individual investors and institutional investors including family offices, registered investment advisors, private equity firms, hedge funds, banks, asset managers, and non-accredited individual investors.
Both accredited and non-accredited investors are eligible to invest in the MogulREIT I and MogulREIT II offerings on RealtyMogul.com, subject to some legal limitations.
In addition to MogulREIT I and MogulREIT II, accredited Investors can invest in private placements on the RealtyMogul.com platform. To qualify as an accredited investor, you must meet certain thresholds as defined by the Securities and Exchange Commission under rule 501 of Regulation D. Specifically, you must meet one of the following criteria:
- Earn an annual income per individual of over $200,000 per year ($300,000 per couple) with the expectation of maintaining such level of income in the future.
- Have a net worth of more than $1 million (individually or jointly), excluding the value of a primary residence.
- Be a bank, insurance company, registered investment advisor, business development company, or small business investment company
- Be a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered.
- Be a business in which all the equity owners are accredited investors.
- Be an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million.
RealtyMogul.com makes it easy for accredited, non-accredited, and institutional investors to invest in real estate
We provide access that was historically limited and pre-vet every investment in the marketplace. We spend countless hours sourcing real estate investments so you don’t have to. We also allow you to invest in real estate with dramatically smaller check sizes. Instead of $50,000 or $100,000 minimums, you can buy shares of investments with as little as $1,000. And we make the process frictionless – allowing you to screen investments online, sign legal documents online, and have access to all your documents in one place on your investor dashboard.
For institutional investors, we are a source of efficient and technology-based production, helping them diversify their portfolio while getting access to a wide suite of commercial debt products.
Real estate companies or individuals list their investment opportunities in the RealtyMogul.com marketplace only after joining RealtyMogul.com, submitting an application, and going through an underwriting and due diligence process.
For equity investments, the RealtyMogul.com underwriting team along with our broker-dealer partner, North Capital, reviews their materials and determines whether the company and the investment is a good fit for our members. We go to great lengths to fully understand the variables of each transaction including return structure, market statistics, quality of the property and the track record, reputation and quality of the real estate investment company we are working with. This process also includes background, criminal and credit checks to mitigate the risk of fraud. Finally, we always tour the property as a final step before it is listed. We reject many equity transactions that are proposed to us, keeping in mind one of our core values - Investor Protection.
At RealtyMogul.com, we look for transactions that provide cash flow to investors as quickly as possible. Some properties may have some level of vacancy or have the ability for our operating partner to add value and increase cash flow over the life of the investment. We do not currently fund ground-up development, as we believe one of the benefits of real estate investing is passive income and development projects typically take 18-36 months to generate income. We do fund apartment buildings, self-storage facilities, hotels, mobile home parks, office and multi-tenant industrial buildings and retail shopping centers.
For debt investments, RealtyMogul.com provides loans for commercial properties including apartment buildings, self-storage facilities, mobile home parks, office and multi-tenant industrial buildings and retail shopping centers. We examine many variables when evaluating debt investment opportunities. For loans on commercial properties, we evaluate metrics including debt service coverage ratios, loan-to-value ratios, and debt yields. Regardless of loan type, we look for borrowers with a successful track record and make sure they undergo background and credit checks so we can ensure financial competence and responsibility.
The liens associated with our debt are frequently “senior” or in “first position,” so in the event of a borrower default, our investors have first claim to the proceeds in the event of a foreclosure. Most of these loans are short-term, ranging from 6-36 months before principal is repaid. We may from time to time offer debt in the second position (mezzanine debt), which is subordinate to our more frequent offering of senior debt. Investors are always made aware of the debt position prior to making an investment decision.
Although no investment is guaranteed, one benefit of investing with RealtyMogul.com is that you are investing in physical assets around the United States. Your investment is in an actual property as opposed to a stock or bond or other non-physical asset.
Yes. Similar to investing in the stock market, there is no guarantee when you are investing in real estate. The real estate market has economic cycles and it is difficult to know how and when the economy will change.
Yes. Our broker-dealer, North Capital, runs KYC (know your customer) and anti-money laundering on all who invest in deals on our site. Additionally, on some offerings where advertising may have been used, some additional verification of an investor’s status as an accredited investor may be required.
Yes. The minimum investment is different for each investment, but can be as low as $1,000.
Joining RealtyMogul.com and browsing the marketplace requires no obligation. For those who choose to invest, there are fees associated with each investment. The fees depend on the type of investment (loan purchase or equity purchase) and the nature of the transaction. In addition to administrative and legal expenses, the fees will cover the ongoing reporting and communications for the investments. As we are big believers in transparency, you can find the specific fee structure for each deal when you browse through our investment opportunities.
An investment is not final until all legal documents are signed and funding has been contributed and cleared. When an investor makes their investment, the money is held securely at a US bank. Once the fundraising target is met and the real estate transaction is completed, the money is transferred for the sole purpose of the specific loan or specific property that is being invested in.
Standard ACH transfer can be made from an investor’s bank account for amounts up to $100,000. Amounts larger than $100,000 are made using a wire transfer. For each investment opportunity there will be specific account numbers that we will provide to the investor so that funds are properly received on our end.
All legal documents can be sent and signed electronically through our website. This allows for more efficient and seamless transfer of documents between you and RealtyMogul.com, while maintaining the authenticity and security of your information. Investments are finalized once proper legal documentation is accepted, funds are confirmed received, and we provide you with completed counterpart signatures.
At this time, we can (and regularly do) process debt investments made through a self-directed IRA account, but it will depend on your custodian's processes/procedures. Our two requirements are that the custodian be able to process documents via electronic signatures, and that it be able to process contributions and distributions via ACH transfer payments. Unfortunately, some custodians have problems meeting these conditions; inquire of your current custodian whether they can work with these requirements, and if not, we can refer you over to other providers who can meet these guidelines.
Investors will be able to view real time updates of their investments when they login to the site and view their investor dashboard. This is their hub of information, and will provide comprehensive metrics about their distributions to date, upcoming milestones, and overall return on investment. Additional emails are sent out when distributions are sent to your bank account.
RealtyMogul.com will work with the real estate company to provide timely updates shared with all investors at least quarterly. Updates will be provided via email and via the investor dashboard. In addition, investors will receive tax documents every year that they have a distribution from a real estate investment on RealtyMogul.com.
Investors who invest in debt typically receive interest payments on a monthly basis, while investors who invest in equity typically receive quarterly distributions.
Usually we will send the cash flow income to the same bank account that the investor provided for their original investment, though we can accommodate changing a distribution bank account by request. We ask for bank information that will allow for monthly or quarterly standard ACH transfers.
Distributions are never guaranteed in amount or timing and you should carefully read the offering documents on the specific deal you are interested in to fully understand how projected distributions look like and what risks are involved.
No. The real estate investments found on RealtyMogul.com are private transactions in physical properties around the United States. The investments are not traded on public stock exchanges and cannot be easily sold or traded.
You may be able to resell your investment security in a private transaction subject to restrictions that are specific to each investment and under the Securities Act of 1933. Since the resale restrictions on RealtyMogul.com can be very limiting, you should not invest with the expectation of reselling your investment.
Different properties have different expected hold periods. A hold period is the anticipated time investors will be involved with the investment until the underlying property is re-sold or the loan on it is paid off. It is important to read the offering documents for each investment opportunity for a deeper understanding of the hold period for each investment.
North Capital is RealtyMogul.com’s broker-dealer partner who provides compliance and regulatory oversight to RealtyMogul.com.
In the event of a corporate bankruptcy, there would be uncertainty and ultimately it would be up to the bankruptcy courts to decide, however, we would work to put replacement servicers in place for all RealtyMogul.com transactions.
Invest in Equity
RealtyMogul.com offers access to a variety of property types including, but not limited to, multi-family, office, industrial, self-storage, retail, medical office, and hospitality.
Investors are typically purchasing shares in a Realty Mogul Limited Liability Company (“LLC”) that in turn invests into an LLC or Limited Partnership (“LP”) that holds title to the real property.
When you invest in an equity opportunity, you are typically purchasing shares of an LLC as a limited member. In turn, that LLC owns (directly or indirectly), along with the sponsor and other investors, a share of a joint venture entity that owns a specific investment property, like a specific apartment building. An LLC gives you liability protection, shielding your personal assets from the investment.
Why do investors invest into a Realty Mogul LLC instead of directly into the company that holds title to the real property?
By investing into a Realty Mogul LLC, it minimizes overhead for the sponsors who work with RealtyMogul.com and allows us to access more investment opportunities for investors. It also allows for streamlined reporting, distributions, and tax documentation through the RealtyMogul.com platform.
Decisions in an LLC are governed by a document called an “operating agreement”. While every operating agreement is slightly different, they usually include a manager (who may also be a member) and limited members. The manager typically makes all of the day-to-day decisions and the limited members act as passive investors on the transaction. The manager can determine how much cash to distribute to the limited members versus how much to hold in reserve and assess possible sales for the property. There are certain activities that might mandate a vote by the limited members and the limited members can typically take action if the managing member defaults on the terms of the agreement or is grossly negligent.
RM Manager, LLC, a wholly owned subsidiary of RealtyMogul.com is typically the Managing Member of Realty Mogul LLCs. RM Manager is an Exempt Reporting Advisor. RM Manager does not own a piece of the Realty Mogul LLCs, but is responsible for certain limited decision making. However, you will need to review the specific offering materials for each investment to fully understand the structure and the duties of all entities involved.
Distributions depend on the specific investment, but are typically provided to equity investors each quarter. Please review the expected distribution schedule for each investment before making an investment. No distributions are guaranteed.
What if I invested in equity and more money is needed for the property in the future? Am I obligated to invest more as an equity owner?
RealtyMogul.com investments typically do not have capital calls. A capital call is where the investor is required to commit more money to the property, beyond the initial investment. Rather than requiring an additional investment, it is possible that investors will be diluted if more money needs to be raised. While this is typically the case with equity investments offered on RealtyMogul.com, please check the offering materials for each investment to fully understand your liabilities as an investor.
One of the benefits of investing in real estate equity through limited liability companies (LLCs) is that LLCs can be treated as partnerships for tax purposes. Partnerships generally are not taxed at the entity level (other than annual franchise taxes and filing fees) and can “pass through” applicable items of income, loss and depreciation to their members.
Non-cash depreciation deductions can shelter or eliminate the amount taxable income that may be otherwise passed through to an investor from a real estate equity investment, particularly in the early stages of the investment. As a result, cash distributions received by an investor, in a year when there is no corresponding pass-through of taxable income (again, due to depreciation deductions), may result in lower or deferred taxes.
The special purpose entity (a Realty Mogul LLC) you own when you invest in an equity transaction reports your annual share of income and loss and distributions on federal and state K-1s that you can then use to prepare your tax return. While the special purpose entities (the Realty Mogul LLCs) that are formed for each equity transaction typically are Delaware entities, there may be filing requirements and tax liabilities in other states depending on the details of a particular transaction, your state of residence, and the location of the investment property.
Realty Mogul, Co. and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. See offering documents for additional details, disclosures, and disclaimers.
Invest in MogulREIT I
MogulREIT I is a limited liability company formed to invest in and manage a diversified portfolio of commercial real estate investments, such as loans, equity in commercial real estate ventures, and other real estate-related assets.
MogulREIT I is a registered, non-traded REIT. That means that it is registered with the Securities and Exchange Commission, but is not traded on a stock exchange.
MogulREIT I can invest in a variety of property types, including but not limited to, multifamily, office, industrial, self-storage, and retail real estate opportunities. MogulREIT I can invest in various commercial real estate-related equity and debt assets across these different property types
MogulREIT I is available to both accredited and non-accredited investors. For non-accredited investors, limitations based on the investor’s annual income or net worth apply to the amount that may be invested.
For most investors, the minimum investment is currently $1,000, or 100 common shares, and investors may invest additional capital at a minimum of $1,000.
For Self-Directed IRA (“SDIRA”) investors, the minimum investment is $5,000, or 500 common shares, and $1,000 thereafter.
If you invest with a Registered Investment Advisor, the minimum is $5,000, or 500 common shares, for the first transaction, and $1,000 thereafter.
Redemptions from the fund are generally allowed on a quarterly basis, subject to the redemptions rights and limitations outlined in the Offering Circular.
How is investing in MogulREIT I different from other investment opportunities offered on the RealtyMogul.com Platform?
The RealtyMogul.com Platform currently offers individual real property-related investments as private placements to accredited investors only. The RealtyMogul.com Platform allows accredited investors to review due diligence materials for individual transactions and invest in one transaction at a time. Investing in MogulREIT I is different since investment decisions are made by its Manager, RM Adviser, LLC, and you are investing in a diversified portfolio and not a specific transaction or property. Additionally, MogulREIT I is accessible to both accredited and non-accredited investors and offers a lower investment minimum than some of the transactions offered on the RealtyMogul.com Platform. RM Adviser, LLC charges a 1% asset management fee for managing MogulREIT I and its investments, whereas the other investment opportunities offered through the RealtyMogul.com Platform may charge fees that are higher or lower. Finally, MogulREIT I is set up as a “blind pool” REIT, which means that it is not committed to acquiring any particular investments with the net proceeds of its offering. Investing in MogulREIT I can lead to greater diversification because MogulREIT I intends to invest its assets in multiple real estate opportunities. However, unlike other investments on the RealtyMogul.com Platform, a purchaser of common shares in MogulREIT I may not know what investments MogulREIT I will make with its assets at the time the investor purchases common shares in MogulREIT I.
MogulREIT I is managed by RM Adviser, LLC, a SEC registered investment adviser and wholly-owned subsidiary of Realty Mogul, Co. RM Adviser, which manages MogulREIT I’s day-to-day operations, will have access to the experienced team of real estate finance professionals employed by Realty Mogul, Co., including Jilliene Helman, its Chief Executive Officer. Many of the senior executives and loan origination professionals at Realty Mogul have deep experience in the commercial real estate sector and have been in leadership roles at financial services institutions for many years. Collectively, these professionals have approximately 200 years of combined direct experience in the commercial real estate business, and have managed more than $4 billion of originations and more than $8.5 billion in underwritings in commercial real estate loans and equity investments. MogulREIT I expects to benefit from the knowledge and industry contacts, experience and judgment that these professionals have accumulated over numerous real estate cycles.
The credit team of Realty Mogul and its affiliates is very experienced in reviewing and underwriting commercial real estate investments. This team has substantial experience in reviewing and underwriting commercial real estate investments and has adopted approaches used by real estate finance industry leaders in its analysis of real estate capital structures and financial strategies, and these approaches will be brought to bear for MogulREIT I’s benefit.
The Manager performs the following services: investment advisory and acquisition services (including performing due diligence on MogulREIT I’s investments), offering services, asset management services, accounting and other administrative services, shareholder services, financing services, and disposition services.
MogulREIT I pursues the investment strategy using the criteria described in its Offering Circular. Some opportunities may arise which could be allocated to either MogulREIT I or the RealtyMogul.com Platform. In these instances, any potential debt investment exceeding $1,000,000 and equity investment exceeding $1,500,000 will first be made available to MogulREIT I. If MogulREIT I chooses not to invest and the investment opportunity meets the investment criteria for Realty Mogul, then those investment opportunities will be made available to other investors through the RealtyMogul.com Platform. MogulREIT I may, where the investment committee of its Manager determines that the size of an investment would create undue concentration in its portfolio or that the entire investment would otherwise be unsuitable for the REIT, permit a portion of an investment to be sold on the RealtyMogul.com Platform.
Invest in MogulREIT II
MogulREIT II is a newly organized Maryland corporation formed to invest in multifamily apartment buildings throughout the United States with both preferred equity and common equity. The REIT’s objective is to make investments into apartment communities that follow one of two core criteria:
- Demonstrated consistently high occupancy and income levels across market cycles; and/or
- Offer value add opportunities with appropriate risk-adjusted returns and the potential for significant value appreciation.
Common equity and preferred equity investments in multifamily apartments.
Common Equity: Equity ownership in a piece of real estate that typically receives a preferred return and a share of the potential appreciation upon sale.
Preferred Equity: Equity ownership in a piece of real estate with a priority of payments on cash flow and upon liquidation, typically receives a fixed coupon that is higher than the properties distributable cash flow and in return does not share in any of the potential appreciation upon sale.
MogulREIT II is available to all investors, subject to some regulatory limitations.
The regulators define some investors as either ‘accredited investors’ or ‘non-accredited investors’. Both may invest in the REIT, but the amount of money that you may invest is different if you are an accredited investor or a non-accredited investor.Accredited investors are defined as:
- Individuals earning an annual income of over $200,000 per year for the last two years ($300,000 per year if filing as a couple), with the expectation of maintaining this level of income in the future; OR
- Having a net worth of more than $1 million (individually or jointly), excluding the value of a primary residence; OR
- Being a general partner, executive officer, director or a related combination thereof for the issuer of a security being offered; OR
- Being a business in which all the equity owners are accredited investors; OR
- Being an employee benefit plan, a trust, charitable organization, partnership, or company with total assets in excess of $5 million.
If you do not meet into any of the guidelines above, you are likely a non-accredited investor. If you are a non-accredited investor, you may still invest in the REIT but your investment may be limited based on your annual income or net worth. RealtyMogul.com may help you to calculate your maximum allowable investment amount when you initiate an investment on our platform.
Investment minimums for MogulREIT II differ based on account type.
For some investors, the minimum investment is $1,000, or 100 shares, and you may invest additional capital in increments of $1,000.
If you invest out of a self-directed IRA account, the minimum is $5,000 for the first transaction, and $1,000 thereafter.
If you invest with a Registered Investment Advisor, the minimum is $5,000 for the first transaction, and $1,000 thereafter.
Public nontraded REITs are not liquid investments, which means you may think of an investment in MogulREIT II as a long-term investment into real estate. We have, however, adopted a Share Repurchase Program whereby we alone may purchase shares back from investors. The Share Repurchase Program is designed to provide our shareholders with limited liquidity on a quarterly basis for their investment in MogulREIT II shares, subject to availability of capital.
After 12 months of ownership, the amount Realty Mogul may pay to repurchase your shares is set at the “Repurchase Base Price Per Share”, the lesser of the price you paid for your shares or the current Net Asset Value (“NAV”), minus a discount based upon how long the shares have been held.
The discount on the Share Repurchase Price is dictated by the stock purchase anniversary as follows:
|Share Repurchase Anniversary (Year)||Effective Repurchase Rate(1)|
|Less than 1 year||(Lock-up) 0%|
|1 year until 2 years||98%|
|2 years until 3 years||99%|
|3 or more years||100%|
|Death (Exception Repurchases)||100%|
(1) As a percentage of the Repurchase Base Price per share. The repurchase price will be rounded down to the nearest $0.01.Additional details regarding MogulREIT II, Inc.’s Repurchase Program are found in the Offering Circular, including all supplements.
- How do you decide which properties or investments go into MogulREIT II and which are offered to the Realty Mogul Platform or other MogulREIT offerings?
Investment opportunities may arise that could be allocated to the Realty Mogul Platform, the MogulREIT II or another MogulREIT offering. In these instances, investments may be distributed as follows:
- Equity investment opportunities under $1,500,000, excluding preferred equity, may be allocated to the Realty Mogul Platform
- If the REITs have capital ready to invest, all other investment opportunities may be allocated based upon the appropriateness of each investment opportunity to each REIT's investment policy
If an investment opportunity is appropriate for the Realty Mogul Platform or any of the MogulREITs, the investment committee may allot the new opportunity based on which entity has gone the longest period without making an investment.
If the investment committee determines that the size of an investment would create undue concentration in the MogulREIT II portfolio or that the entire investment would otherwise be unsuitable, they may permit a portion to be sold on the Realty Mogul Platform to acquire it. They may also choose to deviate from this policy if it impacts the best interest or regulatory requirements of MogulREIT II or another MogulREIT offering.
MogulREIT II is managed by RM Adviser, LLC, a SEC registered investment adviser and wholly-owned subsidiary of Realty Mogul, Co. RM Adviser, which manages MogulREIT II’s day-to-day operations, has access to the experienced team of real estate finance professionals employed by Realty Mogul, Co., including Jilliene Helman, its Chief Executive Officer. Senior executives and loan origination professionals at Realty Mogul have experience in the commercial real estate sector and have been in leadership roles at financial services institutions for many years. Collectively, these professionals have approximately 200 years of combined direct experience in the commercial real estate business, and have managed more than $4 billion of originations and more than $8.5 billion in underwritings in commercial real estate loans and equity investments.
The credit team of Realty Mogul and its affiliates is experienced in reviewing and underwriting commercial real estate investments. The team has adopted approaches used by real estate finance industry leaders in its analysis of real estate capital structures and financial strategies.
Our Manager also may engage American Assets Capital Advisers, LLC, a third-party subadvisor, to manage our cash balance. If engaged, American Assets Capital Advisers, LLC may (i) incur leverage on this cash balance and (ii) may invest the cash and the debt incurred thereon in common or preferred shares in publicly-traded REITs or other short-term investments.
The Manager performs the following services:
- Investment advisory and acquisition services (including performing due diligence on MogulREIT II’s investments);
- Asset management services;
- Accounting and other administrative services; and
- Shareholder services, financing services, and disposition services.
- Where can I get a summary of the MogulREIT II offering and a full list of questions and answers about the offering?
For a summary of the MogulREIT II offering and a full list of questions and answers about the offering, please refer to the Offering Circular.
Invest in 1031
A 1031 exchange is a strategy for deferring the capital gains tax from the sale of a property. By exchanging a relinquished property for like-kind real estate, owners may be able to defer their federal taxes and use the proceeds for the purchase of replacement property.
Generally any form of property held for business or investment purposes qualifies including Apartment Buildings, Single-Family Rentals, Vacant Land, Office Buildings, Self-Storage Facilities, Shopping Centers, and Hotels. These property types may be 1031 eligible properties.
Not all real estate investments are eligible for 1031 exchanges. In order for your investment in real property to be 1031 eligible you must have a direct ownership in the underlying real estate. Debt investments aren’t eligible because they are interests in a promissory note, not the underlying real estate. Similarly, partnership interests (including LLC’s) where an investor owns a share of a partnership interest instead of a share of the underlying real estate would be ineligible. However, per the IRS’s Revenue Ruling 2004-86, ownership of a beneficiary interest in a Delaware Statutory Trust does qualify to be part of an investor’s 1031 Exchange.
Commonly known as “DST”, this entity is often used to hold title to real estate similar to an LLC. Instead of owning a membership interest in an LLC, a DST investor owns a beneficial interest in the DST. Also like an LLC, the entity shields the investor from individual liability. However, unlike an LLC, a DST 1031 property will qualify as a “like kind” exchange replacement property for a 1031 exchange per Internal Revenue Ruling 2004-86.
The DST is typically managed by the DST Trustee and the beneficial owners do not have voting right like they would typically have in an LLC. Instead the DST and therefore the real property investments held by the DST are managed by the Trustee, not the investors themselves. Additionally, the IRS established seven prohibitions over the powers of the DST Trustee, which includes the following:
- Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries.
- The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party.
- The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate.
- The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law.
- Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations.
- All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
- The Trustee cannot enter into new leases or renegotiate the current leases.
DST Agreements often contain a provision that allows the Trustee to convert the DST to an LLC (the “Springing LLC”) if the Trustee determines that the DST is in danger of losing the property due to its inability to act because of the prohibitions in the trust agreement. The conversion to an LLC will allow the Trustee, who becomes the Manager of the LLC to raise additional funds, renegotiate terms of existing debt, and enter into new leases. However, because a membership interest in a Springing LLC is not a 1031 eligible the members (investors) lose their ability to defer capital gains upon the sale of the property owned by the LLC through another 1031 exchange.
The following is a list of the basic elements involved in typical 1031 Exchanges:
- A Qualified Intermediary, sometimes referred to as a “1031 Accommodator” is used to exchange the funds from the real estate that is sold to the real estate that is purchased.
- Investors identify their replacement properties (typically 3 properties) with their 1031 Accommodator within 45 days of sale of the initial property.
- Investors reinvest 100% of the net sales proceeds from the initial property sale into their replacement properties.
- Investors acquire an equal or greater amount of debt on the replacement properties than they had on their initial properties.
- Investors close on the purchase of the replacement properties within 180 days of the sale of their initial property.
Yes. “Cash Investors” are investors who use non-1031 money to invest in a 1031 eligible deal. Once they have completed their investment, those investment funds become 1031 eligible and can be used as part of a 1031 exchange in the future.
Sponsor – Raise Equity
The process is online and the application can be accessed here. You’ll be asked a series of questions about your firm, the specific transaction and other relevant details. From there, a RealtyMogul.com representative will be in contact to initiate the process and work through due diligence with you.
RealtyMogul.com focuses on small balance equity raises, ranging from $1 million to $5 million.
Cash-flowing commercial real estate of most major property types across the United States, including but not limited to, multi-family, office, industrial, retail, mobile home parks, self-storage, and hospitality. We do not currently raise funds for any ground up development, residential real estate, or owner occupied real estate. We are currently looking for diversified, multi-tenant, well located, cash flow producing properties.
Real estate companies that have at least $25 million in acquisition experience as principal. However, sponsors are evaluated on a case-by-case basis.
Yes, RealtyMogul.com requires background, criminal and credit checks for sponsors as part of our due diligence process.
RealtyMogul.com’s investors invest as a single limited member into the joint venture entity that owns the real property. All RealtyMogul.com investors are pooled into a special purpose vehicle, typically an LLC, and then RealtyMogul.com subscribes to the sponsor’s entity as a single investor. This means the sponsor is only responsible for one report, one distribution and one K-1. RealtyMogul.com processes all of the underlying reports, distributions and K-1s for our investors.
RealtyMogul.com requires quarterly qualitative and quantitative investor reporting.
Typically, the sponsor deals and interacts with RealtyMogul.com only, but in certain instances RealtyMogul.com will make direct introductions to the sponsor.
Depending on how much equity the Realty Mogul LLC is investing, RM Manager, LLC, RealtyMogul.com's affiliated Exempt Reporting Advisor, may require some control rights or consent rights. We do require manager removal for gross negligence, fraud or other deceit.
Most transactions are funded within 45-60 days of submission.
No, RealtyMogul.com does not currently have a white-label solution.
RealtyMogul.com has a two-stage approval process that involves a full underwriting of the investment and a tour of the asset.
RealtyMogul.com is a value-added investment partner generally targeting individual projects with a levered IRR objective of 15% or greater, and cash-on-cash yields at stabilization of 8% or greater. However, each deal is evaluated on a case-by-case basis.
RealtyMogul.com will invest as either pari-passu common equity, or as preferred equity where the common equity is subordinated.
Yes. We typically require sponsors to co-invest 10% of the total equity requirement of a transaction.
RealtyMogul.com is aligned with North Capital Private Securities Corp. (NCPS), a broker-dealer and member of FINRA/SIPC and many RealtyMogul.com employees are also affiliated with North Capital. All equity raises are done through North Capital.
Borrower – Raise Debt
To apply for a loan, start the application process here. You’ll be asked a quick series of questions about the property and you. Our propriety technology then will screen your application and if found to be suited, one of our account executives will reach out to discuss further details and provide you with a quote.
RealtyMogul.com offers loans for acquisition and refinance of commercial properties like apartments, office, retail, industrial, self-storage, mixed use, and more.
We offer three main loan products:
- Private “Hard” money loans: 1-2 year term, $0.5-10 million, full recourse, interest only at 9%+. Please note that rates and terms are subject to change.
- Bridge loans: 2-5 year term, $3-50 million size, non-recourse, interest only at Libor +4-7%. Please note that rates and terms are subject to change.
- Permanent loans: 5-10 year term, $1-50 million size, non-recourse, interest only at market rate. Please note that rates and terms are subject to change.
RealtyMogul.com lends on single and multi-tenant office buildings, manufactured home communities, multifamily and student housing, anchored and unanchored retail buildings, industrial, warehouse and flex properties, self-storage facilities, and mixed use properties.
While we make loans similar to a traditional or private lender, our online systems and technology are designed to enhance the process and provide capital throughout the full capital stack.
Borrowers benefit from competitive interest rates, a quicker and more transparent underwriting process, flexibility in product offerings and loan structures.
We offer competitive interest rates but they are subject to a variety of factors including property location, loan size, and experience of the borrower. For CMBS loans, we charge market rates. For bridge loans, we are typically priced between Libor + 4% to Libor + 7%. For private money loans, we typically charge 8-12%.
All except NV, AZ, ND, SD, TN, MN, VT.
Although this is determined on a case-by-case basis, we aspire to fund within 30-45 days from application submission. The process typically includes an in-house underwriting, third party reports review, site visit, documentation and legal review.
The majority of our loans are financed by proceeds from our Income focused REIT, MogulREIT I.